Presenta: Charles Martineau, University of Toronto
Abstract: We study trading gains and losses on Polymarket, the world’s largest prediction market platform, using a comprehensive dataset of more than 1.4 million users from 2022 to 2025, totalling over $20 billion in volume across 70 million trades. We document a striking profit concentration: the top 1% of users capture 84% of all trading gains. Gains flow almost entirely to sophisticated traders who outperformed market-implied probabilities. Long-shot betting drives loss concentration, while market-making strongly predicts positive performance. Our results suggest that the informational benefits of prediction markets come at a cost to unsophisticated participants.
